The DBA Law (Law on Deregulation of Employment Relations Assessment) is a Dutch law that determines how the relationship between clients and freelancers (self-employed workers) should be assessed. The law aims to prevent people from pretending to be self-employed when they are actually working as regular employees. This is called false self-employment.
What does the DBA Law mean for entrepreneurs?
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Responsibility: Both the client and the freelancer must check together whether the freelancer is truly self-employed, or if it’s actually a regular job.
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Model contracts: The Tax Office has created sample contracts (model agreements). If you use such a contract and stick to the rules, you don’t have to pay income tax and social security contributions.
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Fines and back taxes: If the Tax Office finds that a freelancer is actually a regular employee, the client might have to pay taxes and social contributions afterward. This can be costly.
What is false self-employment?
False self-employment means that someone works as a freelancer but is actually doing the same work as a regular employee. This can happen, for example, when a freelancer works for just one client, cannot make their own decisions, and stays with the same client for a long time.
Consequences for entrepreneurs
- Entrepreneurs must be careful when hiring freelancers to avoid fines. So currently, the biggest fear is with companies who HIRE freelancers.
- It’s important to use clear contracts that show whether someone is truly self-employed.
How do you make sure there is no doubt about your self employment?
Since the DBA Law raises many questions, it is not fully enforced yet. The government is working on a better system to make a clearer distinction between genuine freelancers and people who are actually employees.
To avoid appearing as falsely self-employed as a freelancer, there are several steps you can take to clearly demonstrate that you are truly independent and not in a disguised employment relationship. Here are some tips:
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Work for multiple clients
Make sure you’re not only working for one client. Having income from several clients shows that you are independent and not dependent on a single client (and never talk about having a boss or employer: it’s a giveaway, but many freelancers forget they don’t have a boss). -
Make clear agreements in contracts
Ensure you have solid written agreements with your clients, stating that you work independently. For example, you can use a model agreement from the Tax Office. The contract should clearly outline your responsibility and that you are not working under the supervision or authority of the client. -
Use your own tools and resources
Use your own materials, such as a laptop, phone, or other tools needed for your work. This strengthens the impression that you are independent and not reliant on your client’s resources. -
Decide how you perform your work
As a freelancer, you should decide how and when you carry out your work. Your client may expect the final result, but you determine how you achieve it. Ensure that you’re not working under strict instructions or close supervision from the client, as an employee would. -
Set your own rates
As a freelancer, you set your own rates and make clear agreements on the pricing of your services. This shows that you are responsible for your own income. -
Avoid long-term contracts
Try to avoid working with a single client for an extended period, especially full-time. This can resemble an employment relationship. Alternating between projects at different companies shows that you are a genuine freelancer. Of course, the Tax Office understands that you might work in an interim role for a few months or even a year at one location, but avoid staying in the same place for multiple years. Meanwhile, make sure you (demonstrably) engage in acquiring new clients while working for one client (for your next project). -
Promote yourself and advertise
Promote your business through a website, social media, or advertisements. Actively marketing yourself shows that you are looking for multiple clients, just like a real entrepreneur. -
Manage your own administration and pay taxes
Make sure you keep your own records, such as sending invoices, and that you handle your own taxes and contributions. This shows that you manage your finances like an independent business owner.
By following these steps, you can demonstrate that you are truly self-employed and reduce the risk of being considered falsely self-employed by the Tax Office.
Web module assessment of employment relationship
The rules about hiring self-employed people are unclear to many clients. The government has therefore had a web module created that can help. The web module is an online questionnaire that provides an indication of whether an assignment can be carried out outside employment or not.
> Go to the Tax Authorities' independence test